Intrinsic value of Commercial Vehicle Group - CVGI

Previous Close

$10.54

  Intrinsic Value

$5.81

stock screener

  Rating & Target

sell

-45%

Previous close

$10.54

 
Intrinsic value

$5.81

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of CVGI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -19.76
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  662
  726
  792
  861
  933
  1,008
  1,085
  1,166
  1,250
  1,337
  1,428
  1,523
  1,621
  1,723
  1,829
  1,940
  2,055
  2,175
  2,301
  2,432
  2,568
  2,711
  2,860
  3,016
  3,179
  3,350
  3,529
  3,716
  3,911
  4,116
  4,331
Variable operating expenses, $m
 
  667
  728
  792
  858
  927
  998
  1,072
  1,149
  1,230
  1,313
  1,399
  1,489
  1,583
  1,680
  1,782
  1,888
  1,999
  2,114
  2,234
  2,360
  2,491
  2,628
  2,771
  2,921
  3,078
  3,242
  3,414
  3,594
  3,782
  3,979
Fixed operating expenses, $m
 
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
Total operating expenses, $m
  637
  697
  758
  823
  890
  960
  1,032
  1,106
  1,184
  1,266
  1,350
  1,437
  1,528
  1,623
  1,721
  1,824
  1,931
  2,043
  2,159
  2,280
  2,408
  2,540
  2,678
  2,822
  2,973
  3,132
  3,297
  3,470
  3,652
  3,841
  4,040
Operating income, $m
  25
  28
  33
  38
  43
  48
  54
  59
  65
  72
  78
  86
  93
  100
  108
  116
  124
  133
  142
  151
  161
  171
  182
  194
  206
  218
  231
  245
  260
  275
  291
EBITDA, $m
  41
  45
  51
  58
  64
  71
  78
  86
  94
  102
  110
  119
  128
  138
  148
  158
  169
  181
  192
  205
  218
  231
  245
  260
  276
  292
  309
  327
  346
  366
  386
Interest expense (income), $m
  19
  19
  14
  16
  18
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  50
  54
  58
  62
  66
  71
  75
  80
  85
  90
  95
  101
  107
  113
  120
  127
Earnings before tax, $m
  7
  9
  19
  22
  25
  28
  31
  34
  37
  40
  44
  48
  52
  56
  61
  65
  70
  75
  80
  85
  90
  96
  102
  109
  116
  123
  130
  138
  146
  155
  164
Tax expense, $m
  0
  3
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  40
  42
  44
Net income, $m
  7
  7
  14
  16
  18
  20
  22
  25
  27
  30
  32
  35
  38
  41
  44
  47
  51
  54
  58
  62
  66
  70
  75
  80
  84
  90
  95
  101
  107
  113
  120

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  130
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  429
  328
  358
  389
  421
  455
  490
  527
  565
  604
  645
  688
  732
  778
  826
  876
  928
  983
  1,039
  1,098
  1,160
  1,225
  1,292
  1,362
  1,436
  1,513
  1,594
  1,678
  1,767
  1,859
  1,956
Adjusted assets (=assets-cash), $m
  299
  328
  358
  389
  421
  455
  490
  527
  565
  604
  645
  688
  732
  778
  826
  876
  928
  983
  1,039
  1,098
  1,160
  1,225
  1,292
  1,362
  1,436
  1,513
  1,594
  1,678
  1,767
  1,859
  1,956
Revenue / Adjusted assets
  2.214
  2.213
  2.212
  2.213
  2.216
  2.215
  2.214
  2.213
  2.212
  2.214
  2.214
  2.214
  2.214
  2.215
  2.214
  2.215
  2.214
  2.213
  2.215
  2.215
  2.214
  2.213
  2.214
  2.214
  2.214
  2.214
  2.214
  2.215
  2.213
  2.214
  2.214
Average production assets, $m
  85
  93
  101
  110
  119
  129
  139
  149
  160
  171
  183
  195
  207
  221
  234
  248
  263
  278
  294
  311
  329
  347
  366
  386
  407
  429
  452
  476
  501
  527
  554
Working capital, $m
  203
  80
  87
  95
  103
  111
  119
  128
  138
  147
  157
  167
  178
  189
  201
  213
  226
  239
  253
  267
  283
  298
  315
  332
  350
  369
  388
  409
  430
  453
  476
Total debt, $m
  233
  167
  194
  222
  251
  282
  313
  346
  380
  416
  453
  491
  531
  572
  615
  660
  707
  756
  807
  860
  916
  974
  1,035
  1,098
  1,164
  1,234
  1,306
  1,382
  1,462
  1,545
  1,633
Total liabilities, $m
  361
  295
  322
  350
  379
  410
  441
  474
  508
  544
  581
  619
  659
  700
  743
  788
  835
  884
  935
  988
  1,044
  1,102
  1,163
  1,226
  1,292
  1,362
  1,434
  1,510
  1,590
  1,673
  1,761
Total equity, $m
  68
  33
  36
  39
  42
  46
  49
  53
  56
  60
  65
  69
  73
  78
  83
  88
  93
  98
  104
  110
  116
  122
  129
  136
  144
  151
  159
  168
  177
  186
  196
Total liabilities and equity, $m
  429
  328
  358
  389
  421
  456
  490
  527
  564
  604
  646
  688
  732
  778
  826
  876
  928
  982
  1,039
  1,098
  1,160
  1,224
  1,292
  1,362
  1,436
  1,513
  1,593
  1,678
  1,767
  1,859
  1,957
Debt-to-equity ratio
  3.426
  5.090
  5.420
  5.710
  5.960
  6.190
  6.390
  6.570
  6.730
  6.880
  7.020
  7.140
  7.250
  7.350
  7.450
  7.540
  7.620
  7.700
  7.770
  7.830
  7.900
  7.950
  8.010
  8.060
  8.110
  8.150
  8.200
  8.240
  8.280
  8.310
  8.350
Adjusted equity ratio
  -0.207
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  7
  14
  16
  18
  20
  22
  25
  27
  30
  32
  35
  38
  41
  44
  47
  51
  54
  58
  62
  66
  70
  75
  80
  84
  90
  95
  101
  107
  113
  120
Depreciation, amort., depletion, $m
  16
  17
  18
  20
  21
  23
  25
  27
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  96
Funds from operations, $m
  68
  24
  32
  36
  39
  43
  47
  51
  55
  60
  64
  69
  74
  79
  85
  90
  96
  102
  109
  116
  123
  130
  138
  146
  155
  164
  173
  183
  193
  204
  215
Change in working capital, $m
  19
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
Cash from operations, $m
  49
  17
  25
  28
  32
  35
  39
  42
  46
  50
  54
  59
  63
  68
  73
  78
  84
  89
  95
  101
  108
  114
  122
  129
  137
  145
  153
  162
  172
  181
  192
Maintenance CAPEX, $m
  0
  -15
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
New CAPEX, $m
  -11
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
Cash from investing activities, $m
  -9
  -23
  -24
  -26
  -28
  -31
  -32
  -34
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -54
  -58
  -60
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -112
  -118
Free cash flow, $m
  40
  -6
  1
  2
  3
  5
  6
  8
  10
  11
  13
  15
  17
  19
  21
  24
  26
  28
  31
  34
  37
  40
  43
  46
  49
  53
  57
  60
  65
  69
  73
Issuance/(repayment) of debt, $m
  0
  -66
  27
  28
  29
  30
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
Issuance/(repurchase) of shares, $m
  -1
  88
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1
  22
  27
  28
  29
  30
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
Total cash flow (excl. dividends), $m
  38
  16
  28
  30
  33
  35
  38
  41
  44
  47
  50
  53
  57
  61
  65
  69
  73
  77
  82
  87
  92
  98
  103
  109
  116
  122
  129
  136
  144
  152
  161
Retained Cash Flow (-), $m
  -2
  -95
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
Prev. year cash balance distribution, $m
 
  130
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  51
  25
  27
  29
  32
  34
  37
  40
  43
  46
  49
  52
  56
  60
  64
  68
  72
  76
  81
  86
  91
  97
  102
  108
  114
  121
  128
  135
  143
  151
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  48
  22
  22
  22
  22
  22
  21
  21
  20
  18
  17
  16
  14
  13
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
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Current shareholders' claim on cash, %
  100
  50.0
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  50.0
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  50.0
  50.0
  50.0
  50.0
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  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
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  50.0
  50.0

Commercial Vehicle Group, Inc. is a supplier of a range of cab-related products and systems. The Company operates through two segments: the Global Truck and Bus Segment (GTB Segment) and the Global Construction and Agriculture Segment (GCA Segment). The GTB Segment manufactures and sells products, which include Seats, Trim, sleeper boxes, cab structures, structural components and body panels, and mirrors and wiper systems. The GCA Segment manufactures and sells the products, which include Electronic wire harness assemblies and Seats, Wiper systems, Office seating, and Aftermarket seats and components. It supplies products for the commercial vehicle market, including the medium-and heavy-duty truck market, the medium-and heavy-construction vehicle market, and the military, bus, agriculture, mining, industrial equipment and off-road recreational markets. It has manufacturing operations in the United States, Mexico, the United Kingdom, Czech Republic, Ukraine, China, India and Australia.

FINANCIAL RATIOS  of  Commercial Vehicle Group (CVGI)

Valuation Ratios
P/E Ratio 45
Price to Sales 0.5
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 6.4
Price to Free Cash Flow 8.3
Growth Rates
Sales Growth Rate -19.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 342.6%
Total Debt to Equity 342.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.4%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 11.7%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 13.1%
Gross Margin - 3 Yr. Avg. 13.2%
EBITDA Margin 6.3%
EBITDA Margin - 3 Yr. Avg. 6.4%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 4.1%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. 1.6%
Net Profit Margin 1.1%
Net Profit Margin - 3 Yr. Avg. 1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 0%

CVGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVGI stock intrinsic value calculation we used $662 million for the last fiscal year's total revenue generated by Commercial Vehicle Group. The default revenue input number comes from 2016 income statement of Commercial Vehicle Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CVGI stock valuation model: a) initial revenue growth rate of 9.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.2%, whose default value for CVGI is calculated based on our internal credit rating of Commercial Vehicle Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Commercial Vehicle Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CVGI stock the variable cost ratio is equal to 92%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $29 million in the base year in the intrinsic value calculation for CVGI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8.2% for Commercial Vehicle Group.

Corporate tax rate of 27% is the nominal tax rate for Commercial Vehicle Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CVGI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CVGI are equal to 12.8%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Commercial Vehicle Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CVGI is equal to 11%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $68 million for Commercial Vehicle Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 30.829 million for Commercial Vehicle Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Commercial Vehicle Group at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Commercial Vehicle Group, Inc. to Host Earnings Call   [Nov-07-17 07:50AM  ACCESSWIRE]
▶ Commercial Vehicle Group posts 3Q profit   [Nov-06-17 05:13PM  Associated Press]
▶ Commercial Vehicle Group posts 2Q profit   [Aug-07-17 10:48PM  Associated Press]
▶ 5 of the Best Stocks Under $10 for 2017   [Aug-03-17 01:55PM  Zacks]
▶ Commercial Vehicle Group posts 1Q profit   [05:02AM  Associated Press]
▶ New Strong Buy Stocks for April 21st   [Apr-21-17 08:55AM  Zacks]
▶ Five Strong Buy Stocks to Buy at New Highs   [Apr-19-17 07:13PM  Zacks]
▶ Commercial Vehicle Group posts 4Q profit   [Mar-09-17 06:24PM  Associated Press]
▶ Is Commercial Vehicle Group, Inc. (CVGI) A Good Stock To Buy?   [Dec-09-16 07:01AM  at Insider Monkey]
Financial statements of CVGI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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